When you’re in debt, then you may consider any means possible to regain your financial footing. In some cases, this might even mean selling your house.
While your home is meant to be your retreat and oasis, it can be anything but peaceful if those sky-high mortgage bills are stressing you out each month. If you can eliminate that burden from your shoulders, then you can find a more cost-effective place to live so you can start saving for the future.
Does the premise sound promising? Today, we’re sharing how you can sell your house to pay off debt, one step at a time.
"How do I sell my house to pay off my debt?"
Start by Crunching Numbers
If selling your home doesn’t sound ideal, then start by considering what you can do to stay in your current property; are there any services that you can minimize or eliminate to reduce your routine expenses?
While those adjustments can help a little, they’re unlikely to deliver the major turnaround you might need.
If you’re feeling crushed by debt, then the simple answer could be that you’re living in a house that’s beyond your financial means.
Financial experts recommend that homeowners spend no more than 30% of their gross income on their housing. This is to ensure that you still have enough money each month to cover other basic needs, including food and transportation.
If you calculate your mortgage and find that it exceeds 30%, then it’s time to think about your next steps. And, unless you know for sure that your income will increase in the near future, you could continue to feel the weight of debt for an unforeseen duration.
Know What You Could Make
It won’t benefit you much if you lose money on the sale of your house. Ideally, you want to net a profit that’s big enough to help you pay down your debt. Though the market does ebb and flow, real estate tends to appreciate over time.
If you’ve lived in your house for more than five years, then you may have acquired a substantial amount of equity in it. In short, equity is the amount of money that you owe on your mortgage versus what the property is worth; in other words, it’s the market value of your home, minus any expenses that you owe on it.
In addition to time, there are other factors that will influence the amount of equity that you have in your house, including:
- The amount of your initial down payment
- The amount of money that you have paid toward your mortgage
- The current real estate market
Seek Cash Offers
If you’re interested in living debt free, then you may have a number of outstanding expenses that you need to pay off sooner, rather than later.
When you work with a real estate agent and sell your home via a traditional transaction, then the process can be quite long and laborious. This method can also result in high agent fees that cut into your overall profit, which is why it can help to find a cash offers for your property.
When you sell your house for cash, there are no contingencies or commissions to worry about. Without the usual third parties, you can get more money in your pocket, and the process is quicker and easier!
In fact, you don’t even have to worry about a home inspector uncovering some pricey issue with your property before it’s off your hands. Instead, you can simply walk away in confidence, knowing that you can spend your money as you please, as soon as possible.
Consider Selling Inherited Homes
Looking for another way to pay down debt by selling your house? Consider selling any type of real estate that you have inherited. This may include a nearby rental house, a vacation house, or any type of property, really.
When you go this route, keep in mind that you may need to make a few strategic repairs to help you earn a high cash offer.
Especially if you don’t live in the home, or have served as a landlord over the property – you may find that it could use a few minor fix-ups; you may not want to invest a ton of time or money in the effort, but you can take care of easy, cost-efficient updates, like replacing broken faucets or touching up scratched paint.
These small changes can help the home look fresh and attractive to a cash buyer, and could help you earn more money.
Create a Debt Reduction Strategy
Once you’ve received cash from the sale of your house, your next step is to figure out how you’ll spend it. If you intend to apply it toward your debts, then consider following the snowball method; put simply, this is a repayment method in which you’ll tackle your smallest debts first. Once those are paid off, you’ll work toward paying down the larger ones.
The sense of accomplishment and satisfaction you receive from eliminating your minor debts will encourage you as you tackle bigger beasts, such as your student loans and medical bills.
Another option is the debt avalanche strategy, which requires you to pay off the debt that has the largest interest rate first. Then, you’ll pay off the debt with the second-largest rate, and so forth.
There are pros and cons to each strategy, so research the one that will work best for your situation.
Whichever route you choose, the important element is having a strategy. Without one, it’s all too easy to be over-confident in your earnings and start spending the money at will; you’ll need to be sure that you apply it to the right areas, so make a plan beforehand.
Conclusion:
When you’re in the throes of debt, it can feel impossible to work your way out of it. Fortunately, there are a few steps that you can take to minimize this burden and get back on your feet – this includes selling any real estate that you own.
It’s best to find a cash buyer who can help you earn as much as possible, without the extra fees and lagging timeline associated with traditional home sales. If you want to sell house to pay off debt, our team can help you make those connections.
At Selling.House, we guarantee a fair cash offer for your home without any added pressure to sell. Our streamlined buying and selling process is there to make your experience as quick and painless as possible, so that you can easily move on to a debt free life.
Contact us today to learn more!
